Jeff Tillery, head of research at Tudor, Pickering, Holt & Co. in Houston, drew some chuckles from his audience at Thursday’s membership luncheon of the Permian Basin Petroleum Association when he said Wall Street considers the Permian Basin a new basin.

“The Permian Basin has been the hottest topic in energy stocks for the last six months and will be into the next year,” he said, adding that the region will continue to attract capital.

“Capital is excited about the Permian Basin because there are a lot of levers,” he said, citing the Midland Wolfcamp, Delaware Basin Wolfcamp, Clearfork and Spraberry as formations that have yet to be fully produced.

If Texas and New Mexico were members the Organization of Petroleum-Exporting Countries, he said, they would be the second largest producer by 2020, producing about 4.5 million barrels a day, trailing only Saudi Arabia. As it is, he said the Permian Basin and Eagle Ford combined will be responsible for a third of the growth in the world’s oil supply.

“The Permian Basin still has room to run,” he said, with development of various new resources still in what he called early innings. He said significant growth is expected as producers move up the learning curve with horizontal drilling. Independents, he said, are leading the horizontal charge, operating 25 horizontal rigs wile ConocoPhillips is the major operator running the most horizontal rigs, 15 in the Eagle Ford. “We don’t see the majors with the same vigor and speed as the independents, and we don’t see that changing,” he said.

Tillery said his company doesn’t expect crude prices to remain over $100 for an extended period. “We see prices a little lower, but still healthy,” he said. Where that crude is produced, he said, will impact the price.

Natural gas prices are expected to remain in a narrow band of $3.50 to $4.50 per Mcf for the next several years, he said.

The vertical rig count will remain flat as horizontal drilling activity increases and capital access will be critical, he said.

For service companies, he said the national market is about 15 to 20 percent oversupplied and while the Permian Basin will absorb some of that oversupply, it won’t absorb it all.

Globally, he said, despite weak demand and strong supplies, signs point to a balanced global market with demand in developed nations remaining flat but growing in developing countries.